Jordan presses sweeping tax evasion crackdown to aid ailing economy

Jordan’s Prime Minister Omar Al-Razzaz said protecting public money and fighting corruption is a national duty. (File/AFP)
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Updated 13 July 2020

Jordan presses sweeping tax evasion crackdown to aid ailing economy

  • Tax authorities have raided around 650 companies so far

AMMAN: Jordan’s Prime Minister Omar Al-Razzaz promised on Sunday to deepen a crackdown on tax evasion that officials say has deprived the country’s cash-strapped economy of billions of dollars’ revenue in recent years.
The government has gone after senior businessmen and former politicians suspected of tax dodging, money laundering and customs evasion in a weeks-long campaign that has gained greater urgency with the hit to state finances from the COVID-19 pandemic.
“Protecting public money and fighting corruption is a national duty,” Razzaz said in his weekly television address to the nation.
Tax authorities have raided around 650 companies so far, sometimes accompanied by security forces, according to officials who say this is the biggest campaign to combat tax evasion in decades.
The government said it had frozen the assets of dozens of companies and businessmen on suspected tax evasion charges. It added that it would track offshore havens where wealthy Jordanians have long parked cash to avoid taxes.
Some critics have accused the government of using the campaign to carry out a witch hunt against its political enemies, including some of Jordan’s leading business figures, including former ministers and senior politicians.
Officials deny that, saying the goal is to ensure justice and that no one is above the law.
The government has been using its wider powers under a state of emergency since March to give prosecutors and the main anti-corruption agency greater powers, and stiffen penalties.
A two-month coronavirus lockdown has crippled Jordanian businesses and slashed state revenues by tens of millions of dollars, leading to the sharpest economic contraction in two decades.
The government expects the economy to shrink by 3.5% this year, a far cry from an International Monetary Fund (IMF) estimate of 2% growth before the pandemic.
The aid-dependent country, already undertaking a tough three-year IMF reform program, tapped international debt markets this month to borrow $1.75 billion.


Turkey on brink of recession as economy collapses

Updated 13 August 2020

Turkey on brink of recession as economy collapses

  • Consumer debt has increased by 25 percent to more than $100 billion in the past three months

JEDDAH: President Recep Tayyip Erdogan’s popularity is plunging in lockstep with Turkey’s collapsing economy and the country is on the verge of a potentially devastating recession, financial experts have told Arab News.
The value of the Turkish lira has fallen to 7.30 against the US dollar and the central bank has spent $65 billion to prop up the currency, according to the US investment bank Goldman Sachs.
Consumer debt has increased by 25 percent to more than $100 billion in the past three months as the government moved to help families during the coronavirus pandemic, but the result has been a surge in inflation to 12 percent.
With the falling lira and increased price of imported goods, the living standards of many Turks who earn in lira but have dollar debts have fallen sharply.
The economy is expected to shrink by about 4 percent this year. The official unemployment rate remains at 12.8 percent because layoffs are banned, although many experts say the real figures are far higher.
To complete the perfect storm, tourism revenues and exports have been decimated by the pandemic, and foreign capital has fled amid fears over economic trends and the independence of the central bank.
Wolfango Piccoli, of Teneo Intelligence in London, said logic dictated an increase in interest rates but “this is unlikely to happen.”
Piccoli said central bank officials would strive to avoid an outright rate hike at their monetary policy meeting on Aug. 20. “A mix of controlled devaluation and backdoor policies, such as limiting Turkish lira’s liquidity, remains their preferred approach,” he said.
There is speculation of snap elections, and Erdogan’s view is that higher interest rates cause inflation, despite considerable economic evidence to the contrary.